The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Robbing Peter to pension off Paul

The conglomerate is almost extinct in many countries but in Germany it still thrives. Not only do widely diversified companies such as Siemens, Bayer and Henkel plod on, they also continue to fight off demands from investors for tighter business focus. ThyssenKrupp even plans to make itself yet more complex.

Why are the conglomerates so reluctant to simplify themselves? The conventional wisdom is that they are run by bone-headed empire builders and egoists. And some might well be. But Germany's pension problem might also have a hand in their survival.

Balance sheet nightmares

The German pension regime is uniquely difficult for corporate managers. The obligations to ex-employees are high and German law makes it hard to close plans or make them less generous. That's bad enough in young, high-growth companies, but in mature industrial companies it's a total nightmare. Because few German companies endowed external pension funds in the past, and fewer mature businesses have the wherewithal to do so now, they are forced to keep the liabilities on their balance sheets.

This is a hefty burden for mature businesses to bear. Pension liabilities are nine-tenths as large as shareholders' equity for Siemens (which does keep most of them off balance sheet).

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree